Company News

UPDATE 1-Nokia says has stopped using phone subcontractors

* Stops using subcontractors for phone making

* Subcontractors made 17 pct of Nokia phones in 2008

* Nokia, BYD shares lower

(Adds details, background, shares)

HELSINKI, March 26 (Reuters) - Nokia NOK1V.HE, the world's top cellphone maker, has stopped using subcontractors in the assembly of its phones due to faltering demand for mobile handsets, a spokeswoman for the company said on Thursday.

“In engine making we have fully stopped (using subcontractors),” said a company spokeswoman, adding the firm was still using them in other functions like packaging or logistics.

In 2008 Nokia outsourced approximately 17 percent of the manufacturing volume of its mobile phone engines, which include the phone and software that enable its basic operations.

Nokia's key subcontractors have been Foxconn 2038.HK, China's BYD 1211.HK, Jabil Circuit JBL.N and Elcoteq ELQAV.HE.

BYD shares slipped in afternoon trading in Hong Kong and were down 0.3 percent at 0815 GMT, even as the broader Hang Seng Index .HSI soared 3.6 percent.

Nokia said in January it aimed to cut annual costs at its key handset unit alone by more than 700 million euros to counter plunging demand. [ID:nLH416501]

The overall cellphone market is expected to contract by about 10 percent this year, hurt as consumers rein in spending and handset sellers try to clear out unsold phones.

Shares in Nokia were 1.1 percent lower at 9 euros on a softer DJ Stoxx European Technology Index .SX8P. (Reporting by Tarmo Virki; editing by Simon Jessop)